Cupcake Wars Excel Template / Narrative Paper
The Cupcake Wars Excel template contains several tabs. Each tab represents a business decision your group will need to make. These tabs will also correlate to a section of the narrative paper. Your team will be guided along the path of starting a new business by completing each tab and then providing explanation and insight into the analysis and lessons your group learned along the way.
1. Introduction
2. Location
Determine where your shop will be located. How many square feet will you need, and why did you determine this amount? How much will rent be per year and per square foot? Discuss the annual rent, per square foot rent and other fees that you may need to pay. Assume utilities are included in the rent.
Your shop will be your retail space and your kitchen. Your location does not have to be an actual location. For example, if I wanted to locate my shop in Old Town in St. Charles MO, I would find out the average square footage rent for that area, but if you find a vacant location, that’s even better. You can obtain this information by calling a Commercial real estate agent and asking for the rent per square foot and other costs. Be sure to tell them you are a Herzing University Student asking this information for a class project. Be sure to thank them for their time.
Complete the Location tab in the Excel spreadsheet to determine monthly rental costs.
In your narrative paper, discuss your findings. If possible, include a picture of the location and attach it as an exhibit to the paper.
3. Competition
Examine the competition in a 1-2-mile radius of your shop. How many other shops sell dessert? List the details in the excel spreadsheet. What are other cupcakes being sold for in other shops? Discuss in the paper what makes these shops unique and what you will do in your shop to be different from the competition. Do a little outside research to find out how cupcakes are trending as a dessert or go interview an owner of a cupcake shop. Be sure tell them you are doing this from a school assignment with Herzing University.
4. Product
Choose your cupcake. In the real world, you would offer many varieties of cupcakes, but to simplify our simulation, you will choose one type of cupcake.
- What is the name of your cupcake?
- Why did you choose this cupcake?
In the paper, discuss why you chose this cupcake and the recipe. If possible, include a picture of your cupcake in the appendix (A picture from the internet will be acceptable-be sure to cite your source).
In the spreadsheet, cost out the list of ingredients. Assume your group will make the cupcakes and run the retail shop. The team will not take any salary, but instead, divide the profits at the end of the year. How much are the variable costs for your cupcake? How many cupcakes can you make in one batch? What will you sell your cupcake for? How did you determine this amount?
5. Fixed Costs
To install a commercial kitchen with all the required equipment and compliant with all the regulations required by your municipality, the cost will be $25,000. This will also include the retail counter, glass case, and a few tables and chairs. Assume the average life of this equipment is 15 years. Use these figures to determine annual and monthly deprecation in the spreadsheet.
Do a little research to determine other costs that the business will incur like insurance, marketing, and internet. Does your municipality require a license to operate a dessert shop?
Discuss your fixed costs in the paper.
6. Breakeven
In the excel sheet, complete the Cost Volume Profit and Breakeven for your cupcake shop. You will perform two breakeven analysis. The first will be to determine the amount you need just to cover your fixed costs and the second analysis will be to determine the number of cupcakes you need to sell to achieve a target income per month.
Summarize your analysis in the paper.
7. Analysis
As a team, determine store policies and make some operational decisions.
In the excel spreadsheet complete this analysis.
Discuss your decisions and analysis in the paper.
8. Sales Plan
At this point in your analysis will the cupcake shop alone produce enough sales to be profitable? If not, what are some other sales strategies you can employ to make additional sales? Can you supply cupcakes to corporate events, weddings, or birthday parties, or sell them wholesale? Determine if you will need to increase your marketing budget to attract this type of business. To keep the analysis simple, assume you can sell a quantity order for the same price as you charge in the store. How many cupcakes do you plan to sell monthly to become profitable?
Use the spreadsheet template to make your calculations and provide insight for your analysis.
Discuss the rationale, and details behind your decisions for this section.
9. Budget
In the spreadsheet, prepare the first year’s budget. Use the Sales projections from the Sales Plan to complete the income portion of the income statement. Be sure to include seasonality in your fixed expenses.
In the paper, discuss your analysis of the budget and results of your first-year projections.